Chunghwa Evergreen Technology Ltd.

Case:

Key Words:

multi-level sales, participation contract, electronic document

Reference:

Fair Trade Commission Decision of January 11, 2007 (the 792nd Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 096002

Industry:

Direct Selling Establishments (4872)

Relevant Laws:

Article 23 of the Fair Trade Law

Summary:

1. According to the FTC Multi-level Sales Enterprise Supervision Program of FTC 2006 administrative plans, the supervising units shall select partial multi-level sales enterprises for inspection. Enterprises selected shall include those who sell intangible products, have reported but not yet completed the procedure, have been complained by the public, have abnormal sales amount, or have not been inspected over a certain period of time. Chunghwa Evergreen Technology Ltd. (hereinafter called "Chunghwa Evergreen") was selected because of its reported multi-level sales activities promoting and selling mobile phone numbers.
2. After the operation inspection completed by the FTC personnel at Chunghwa Evergreen's major places of business, it was found that several statutory items to be stated in the participation contracts were written in the form of an electronic document and placed on the website for the participants to view online. These items included conditions of withdrawal by a participant and the rights and obligations arising from the withdrawal, relevant laws and regulations regarding multi-level sales, refund handling methods under the circumstances where a participant is at fault, and specific default by a participant.
3. Grounds for disposition: Pursuant to Article 12(2) of the Supervisory Regulations Governing Multi-Level Sales, the writings referred to in the preceding paragraph may not be in the form of an electronic document. Though Chunghwa Evergreen did enter written participation contracts with its participants, partial statutory items to be stated in the written contract were done in the form of an electronic document. This was proved by the information obtained from the operation inspection.
4. After considering the motive, purpose and anticipated improper profits of the unlawful acts of Chunghwa Evergreen; the degree and duration of the unlawful acts' harm to market order; the benefits derived on account of the unlawful acts; the enterprise scale; the remorse shown for the acts and attitude of cooperation in the investigation; and other factors, the FTC, in accordance with Article 42(3) and the fore part of Article 41 of the Fair Trade Law, imposed an administrative fine of NT$50,000.

Appendix:
Chunghwa Evergreen Technology Ltd.'s Uniform Invoice Number: 27867217

Summarized by Li, Shih-Che; Supervised by Hsu, Hung-Jen